The dry bulk sector struggled during 2022 as continued lockdowns in China met growing recession fears globally. The result has been freight markets under pressure and steeply discounted equities to our NAVs.

However, we find fleet growth constrained on a relatively low orderbook-to-fleet ratio (7%, the lowest on record back to 1996) and believe the 2023 regulations could dent supply.

Meanwhile, the fundamental market balance is already close to an inflection point as illustrated in rather recent market strength through most of 2021 and at times during 2022.

Resurging Chinese demand could thus ignite another bull run in the sector and we see meaningful upside potential to the stocks we cover against limited downside risk which in sum poses an attractive entry point.